Equities and downturns: equities are not very far-sighted
S&P500 DECLINE FROM 5 YEAR PEAK
0
0
-10
-10
4
-20
-20
6
0
0
2
-30
-30
6
NUMBER OF MONTHS PRIOR TO THE RECESSION START
0
-40
-40
12
WHERE THE S&P500 WAS WITHIN 2% OF ITS CYCLE PEAK. MEDIAN=4
-50
-50
11
6
MONTHS. EX-1970s MEDIAN=2 MONTHS.
-60
-60
1
50 55 60 65 70 75 80 85 90 95 00 05 10 15 20 25
1
Sources: Standard & Poor’s, NBER
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